The price of crude oil began a new week with negative dynamics. Prices are adjusted downward on Monday in anticipation of the next OPEC ministerial meeting, which is expected to take place on July 15.
The market is facing some serious pressure factors at present, which may affect the outcome of the OPEC meeting. One of which is the large volume of raw materials in the United States, which has been recorded for several weeks and is at odds with preliminary data from analysts. Another one is the threat of the new wave of coronavirus infection which, judging by the daily increase in the number of cases, may not be avoided. These and other economic crises, taken together, may force OPEC to keep the decline in oil production under the agreement between the two countries at the same level of 9.7 million barrels per day, while in the current version of the agreement this figure should become less starting next month.
However, most experts are still confident that we may not expect such an outcome since the price of oil globally has grown rapidly and has doubled since the implementaion of the treaty. And this is precisely what the organization sought when it developed support measures for the global black gold market.
Moreover, according to some credible sources, there is in fact not even the most meager reason to believe that the reduction in production will remain at the same level. They also added that the decrease of 7.7 million barrels per day is already being actively discussed. These actions are actively supported in countries such as Russia and Saudi Arabia. However, it is still not safe to assume that the decline will go smoothly and will not be noticed in the market. This will most likely lead to additional and significant pressure on the raw materials market.
Meanwhile, according to the monthly report of the International Energy Agency, the supply of oil in the first month of summer decreased by 2.4 million barrels per day and reached its minimum value of 86.9 million barrels per day over the past nine years. At the same time, demand for black gold this year was at the level of 92.1 million barrels per day, which is 400 thousand barrels higher than the previously expected result.
However, an even greater reduction in the price of crude oil may come amid news of the resumption of active production activity in the fields in Libya, which began after the country left the phase of an active civil war. The work of Libyan oil installations can add approximately 900 thousand barrels of oil per day to the existing supply on the market.
The potential increase in supply in the oil markets is, of course, not the most pleasant moment. But the global pandemic crisis that the world is facing at present frightens the market participants even more. Over the last working day last week, the increase in COVID-19 patients in America completed to a record number of 63,000. In addition, the number of people infected in Latin America, India, South Africa, and other countries is also growing rapidly, which suggests that the second wave seems to be inevitable.
At the same time, the number of operating oil and gas production stations in the United States of America last week dropped by another five units. Thus, their total number is now 258 installations. Of course, this is also a record drop since a year ago, there were a total of 958 installations. The number of oil production units decreased by 4 units and reached 181 which was around 788 in the previous year.
The price of futures contracts for Brent crude oil for delivery in September on a trading floor in London fell by 0.67% or $ 0.29 per barrel. Their current value was $ 42.95 per barrel. Recall that Friday's trading last week ended in a 2.1% increase in value or $ 0.89, while the closing price was fixed at around $ 43.24 per barrel.
The price of futures contracts for WTI crude oil for delivery in August on an electronic trading platform in New York also declined by 0.74% or $ 0.39, which pushed it to the level of 40.25 dollars per barrel. During last Friday's closing, contracts, on the contrary, rose by 2.4% or $ 0.93, and their value level was in the range of $ 40.55 per barrel.
Thus, oil futures for the past week have changed in different directions. WTI brand raw materials became a little cheaper by 0.3%. Brent raw materials, on the contrary, rose 1% to their previous value.